Russell Cohen

Where Does Your Company Fit?

Where Does Your Company Fit?

May 2015

The recently released 2003 Business Reference Guide provides a breakdown of the size of businesses in the U.S. Since exact data is almost impossible to obtain, some of the following are estimates or educated guesses. For reference purposes, they are divided into Levels – an arbitrary term.

Business Sizeby Employees

% of Total # of Businesses

Average Anual Revenues

Average # of Employees

1 to 4

54.7%

$321,000

2.1

5 to 9

20.8%

$792,000

6.6

10 to 19

12.3%

$1,600,000

13.4

20 to 99

10.1%

$5,701,000

39.2

100 to 499

1.6%

$27,056,000

192.2

500-999

less than 1%

$540,467,000

688.6

Note: Percentages do not add up to 100% due to rounding.

Small Business

Level One – Businesses in this category have annual sales of less than $500,000 and have less than four employees. There are approximately 3.1 million of them and they represent about 55 percent of all of businesses with one employee or more. These businesses tend to sell for $500,000 or less.

Level Two – These businesses have annual sales of $500,000 to $1 million and have five to nine employees. There are approximately 1.2 million of them and they represent approximately 21 percent of all businesses that have one employee or more. They tend to sell for less than $1 million.

Level Three – Businesses in this category have annual sales of $1 million to $2.5 million and have 10 to 19 employees. There are approximately 690,000 of them and represent about 12 percent of all businesses with one employee or more. These businesses tend to sell for less than $2.5 million.

Level three is at the top end of what could be considered small business and begins what might be classified as the larger business or middle market all the way up to the much larger Fortune 100. At the top end – Levels Five and Six – the number of these sizes of businesses and the percentages they represent of the total number is very small. Since these top two levels represent very large companies with huge workforces, the numbers can be misleading. However, using SBA guidelines, Level three ends the very small business category that is 19 or fewer employees. At the same time, it also represents over 85 percent of all businesses with one employee or more. These businesses average annual sales of about $412,600 and average 6.6 employees.

The Larger Business

Level Four – These businesses have annual sales of $2.5 million to $10 million, with an average of approximately $5,200,000. They have 20 to 100 employees with an average of 40. There are about 566,000 businesses in this category, representing approximately 10 percent of all the businesses with one employee or more. These businesses generally sell for $10 million or less.

The Mid-Size Businesses

Level Five – These businesses have annual sales of $10 million to $50 million and have 100 to 500 employees. In general, they average $27,000,000 in annual sales and have on average 192 employees. There are about 90,000 of them, which represent approximately 2 percent of all businesses with one employee or more. They tend to sell for less than $50 million.

Level Six – These businesses have annual sales of $50 million or more, but average $669,219,000 in annual sales. They have 500 or more employees, but average 3,157 employees. It is easy to see that the size of these firms, in general, is weighted to the very large public companies. There are only about 22,000 of them, representing less than 1 percent of all businesses with 1 employee or more. They will usually sell for more than $50 million.

The Number of Businesses that Sell!

The following are rough estimates only.

Category

# of Businesses

# for Sale

# that Sell

Level One

3.1 million

620,000

124,000

Level Two

1.2 million

240,000

48,000

Level Three

690,000

138,000

34,500

Level Four

566,000

113,000

37,500

Level Five

90,000

9,000

4,500

Level Six

22,500

2,250

2,250

Note: All figures are rounded and totals may be slightly more or less than 100 percent. They are estimates only. The term “sell” refers to an actual sale, merger, or any major change in ownership.

Non-competition agreement – is used to prevent an employee from working for the competition in the event they leave or are terminated by a company.

Non-disclosure agreement – is used to prevent an employee from revealing company secrets or any confidential information to anyone else.

Non-solicitation agreement – is used to prevent an employee from solicitation or doing business with any of a former company’s employees or its customers or clients.